Apple yesterday said it sold a record 74.5 million iPhones in the December quarter, a record that bested the old by a whopping 24 million -- close to the entire quarter's sales in April-June 2012.

iPhone sales were up 46 per cent compared to the December 2013 quarter, which until Tuesday was Apple's best-ever.

"Apple defied the law of large numbers," said Ezra Gottheil, an analyst with Technology Business Research, referring to the already-huge base of iPhones, the impressive sales of a year prior -- 51 million -- and the inherent difficulty of doing anything but nudge such a big needle.

"Everything came together for them for the iPhone this quarter. The supply chain was executed perfectly, they pretty much met demand, and they launched the larger models," said Gottheil. "It was all in sync."

CEO Tim Cook called the iPhone numbers "staggering" and "hard to comprehend" during yesterday's earnings call with Wall Street.

Revenue generated by the iPhone topped US$51.1 billion, another record - 58 per cent higher than the previous set in the December 2013 quarter - and accounted for 69 per cent of the company's total revenue of $74.6 billion, yet another record. The iPhone's prior share maximum of 57 per cent had been set in 2014's first quarter.

In other words, more than two-thirds of Apple's revenue came from the iPhone, with the other legs of its sales stool - the iPad and Mac - contributing just 12 per cent and 9 per cent, respectively. The Mac share was an all-time low, while analysts had to backtrack to Q1 2011, less than a year after the iPad's launch, to find a three-month stretch where the tablet did so little, percentage-wise, for the bottom line.

Apple launched its latest iPhones in September, bumping up the screen size of the mainstream iPhone 6 and debuting a so-called "phablet," the 5.5-in. iPhone 6 Plus.

Although some had wondered whether Apple had missed the big-screen bus - especially in China and other parts of Asia, where phablets are particularly popular - that wasn't the case.

"This 74.5m in iPhone sales tells us that this was not true," said Ben Bajarin of Creative Strategies on Tech.pinions today (subscription required). "Apple didn't lose customers and, more importantly, they increased their base of new users by anywhere from 15-18m based on my estimates."

Greater China, a sales region Apple defines as the People's Republic of China, Hong Kong and Taiwan, put $16.1 billion on Apple's bottom line during the December quarter, 22% of the total and a year-over-year jump of 70%.

iPhone sales in China were double that of the year prior, Apple said.

"The numbers show that Apple was able to get a high conversion rate from other high-end smartphones there," said Gottheil about Apple's China business. "They've managed, unlike Samsung, to create something that's an object of desire."

Apple saw even bigger opportunities ahead.

Cook said that "only a small fraction" of the installed iPhone base had as yet upgraded to 2014's models, and added that Apple drew in its largest-ever number of new-to-iPhone customers as well as the highest "switcher" rate from Android during the quarter. Later, Cook quantified the upgrade rate as in the low-to-mid-teens. "So we're very, very bullish," he said.

Gottheil thought the numbers were evidence that both Apple Pay and the Apple Watch were well-timed. The huge iPhone sales will push even more retailers to adopt Apple's electronic payment technology, he said, and give the Apple Watch -- which Cook said will ship in April -- an even better chance of breaking out of the currently minuscule smartwatch market and into the mainstream.

"The only Watch buyers will be iPhone buyers," said Gottheil, pointing out that the more of the latter the more potential for the former. "And that's good news for Apple. They already have these high-satisfied customers who in many cases have shelled out $600 or $700 or $900, who will pay several hundred more for a Watch."

Apple has only revealed the price of the entry-level Apple Watch, which will list for $349. The Watch will work with the iPhone 6 and 6 Plus, as well as the 5, 5C and 5S. All but the iPhone 5 are still available, so the entire 74.6 million sold in the December quarter were Watch-compatible.

One problem that the big numbers -- whether iPhone unit sales, the money they made Apple or even the quarter's total revenue -- present for Apple is in matching them down the road, always a concern for a publicly-traded company whose stockholders want to see growth, always growth.

It came up in the Q&A section of the earnings call when financial analyst Katy Huberty of Morgan Stanley asked Cook about the sustainability of iPhone demand.

The question was fair, said Gottheil. "I don't think Apple will ever have a quarter like this one in terms of relative growth," he said, even though the absolute numbers can, and will likely be, beaten. There are simply too many headwinds, ranging from slowing growth in the overall smartphone market and Apple's high-priced positioning to fewer major improvements in the technology and Apple's saturation of the world's biggest carriers.

"Apple will settle in for the long haul," Gottheil said, meaning that it will continue to rake in billions, sell millions of iPhones, but probably not be able to reproduce the percentage boom of December.

"Is this peak iPhone?" asked Ben Thompson, an independent analyst whose Stratechery website and subscription has become a go-to resource for many who cover technology.

Obviously, Cook didn't think so, because he answered Huberty by rattling off everything from the small size of the upgrade so far to the potential from consumers who now own premium Android smartphones.

"I suspect that most of Apple's growth will come from those Android switchers," Thompson wrote in his subscriber-only analysis today. "It will be fascinating to see if Apple can keep up the momentum: most assumptions about technological products are that people buy cheaper devices over time, not more expensive ones, but perhaps the mistake most commonly made about the iPhone is seeing it as simply another technology device."

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